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Microfinance Institution
Poverty is a social scourge that has eating deep into fabric of our society in African continent, Nigeria in particular and it has also become a global concern that has ravaged humanity and made sustainable livelihood a mirage for almost seventy percent of World’s population. Mostly hit by this scourge is less developed or rather developing nations of sub-Sahara Africa, Asia and Latin America. Research has it that more than seventy percent (70%) of Nigerian population is living below poverty level of one dollar (1USD) per day.
In view of this, poverty transcend beyond continental borders, it is a global issues and it was listed as one of the nine global issues under the Millennium Development Goals (MDG) agenda endorsed by leader of countries across the globe and a target has been set, that by the year 2015, poverty in the World must be reduced by half.
I am strongly convinced within me that if citizenry of the developed nation that are not directly affected by poverty can be disturbed with this societal nuisance. I Think I should be more concerned and do everything possible to compliment the efforts of my government to fight the syndrome to stand still. The feelings of doing things for charity has been the impetus to start this business of Microcredit administration, which when combine with other tools like literacy programme, has proved to be a missile to eliminate poverty in our society.
As laudable as the efforts by various institutions and agencies towards alleviating poverty, such as the National Poverty Eradication Programme (NAPEP) in Nigeria, various states governments and even local government councils put up one programme or the other to liberate the masses from the shackles of poverty. It is still glaring that there is still a wide gap left unfilled in the battle against poverty.
Hence, the need for non-governmental initiative intervention. oneVillage foundation, Nigeria is ready to bridge the missing link via provision of various capacity building programmes and Microcredit scheme to assist the less privileged.
The Business
The target of this business is basically the poor ones, that is, the petty traders struggling to survive above poverty level. For effective performance and easy capturing, Ibadan North Local Government area will be the first operational area.
Ibadan North Local Government is one of the Eleven Local Government in Ibadan, the capital of Oyo State, Nigeria, which happened to be the largest city in West Africa and second largest in Africa is the target region to commence the operation because of its enormous market size and its densely populated. The features the area has will be the opportunity that will make our working plan an outstanding success; the region is popular for its largest land coverage with many commercial activities.
The region comprises of large concentration of the poor characterised by low income, poor housing, low educational level, poor access to portable water and congestion. Although, there are this kind of services provided by some institution, those that succeed do so as a result of making fund available to meet their client’s demand at appropriate time but no organisation has embarked on the same type of product we are about to sell in this region, this is one of our numerous strength that will attracts large number of people to the product.
The first phase of the programme will involve the promotion of MFI to clients who are developing or have interest in work that is relevant to the Unity Center focus and to local economic, cultural and ecological assets. Specific target groups may include: artisans, traders, ICT entrepreneurs, sustainable development specialists, and groups often marginalized by the society such as women and the Physically Challenged. An entry evaluation process will ensure that clients are genuinely financially incapacitated and merit the loan which will be determined based on the level of need and economic activities of the would be beneficiaries.
Each individual, at the point of registration will pay a token to take care of their registration materials and they will also have a saving account for weekly savings. Loan beneficiaries shall enjoy a two-week moratorium after collecting their loan before commencing repayment, which will be on weekly basis. Basing the interest on loan 26% across board and the repayment shall be spread over Forty (40) weeks.
Reaching our target people would be made possible by starting with a pilot group of the traders and empower them base on social trust. They will be charged with the responsibility of forming more groups of the same features with theirs. With this, we are aiming at 70 percent (70%) of the total market available and if enough funds are available, capturing 100 percent (100%) of the total market would be possible. The pilot group members will be used as the distribution channel to network other potential beneficiaries. In addition, other public relation tools like fliers, postal, billboards, radio and television advertisements will be adopted.
The design of micro-finance products e.g. interest rates, repayment schedule, application procedures, loan sizes and purpose and savings conditions are often seen as technical banking issue which will be decided by the programme staffs. The main consideration is the financial self-sustainability. My competitors have given very little attention to empowerment questions. However, evidence indicates that women's ability to use micro-finance to increase incomes and control these incomes are also affected by details of the conditions of micro-finance delivery.
This business concept will integrate women's needs and concerns into product design so that they have equality of access to all products by;
(1) removing all gender discrimination in loan e.g collateral requirement which disadvantage women may not be able to provide.
(2) application and promotion procedures to equally target women's information networks and locations and times accessible by women.
(3) repayment schedules and interest rates to reflect the reality of women's economic activities and life cycles.
(4) Repayment schedules and interest rates to maximise impact on incomes.
(5) Active and preferential promotion of loans to women for new activities on condition of proof active involvement in their group activities.
Groups Microcredit Administration is a capacity building channel via group. People of like mind living in the same area or rather carrying out business activities in the same area will be asked to come together. For proper coordination, 10-25 members makes a group, the group will have its identity in form of name, number, location of meeting place, coordinating officer and time of meeting.
As UNDP declared year 2005, the year of Micro-finance, there are several programmes that have been put in place to make this objectives achievable by UNDP her selves and some other organisation. I hope to also seek for seed funding to start-up this project from all these other means.
We already have business partner who share the same vision with us and their role among others include Monitoring and Evaluation of the project, training of staffs especially the credit officers, financial advice and support. We wish to coordinate with more partners to further strenghtning both our technical and financial capacity.
Development
Capital is identified to be an essential tool to address poverty. This is because every good business ideas needs finance to take off and people always look for where they could get this support to start up business which they need to survive on.
Adequately funded, effectively implemented and closely monitored, the Micro-credit scheme will create the following impacts in the socio-economic life of the community and in the lives of beneficiaries:
1. Corroborate the effort of national governments and other stakeholders in the micro finance sector in alleviating poverty in the country.
2. Restoring human values and aspiration by helping the less privilege to attain sustainable livelihood.
3. providing revenue-generation opportunities for business oriented but economically incapacitated individuals.
4. Supporting micro-credit activities in the rural areas.
5. Empowering disadvantaged members of the society through credit facilities for income generating activities.
6. Sourcing funds for small and medium entrepreneurs for the purpose of expanding their business.
7. Promoting Sustainable Development.
9. Training people in rural areas so that they have basic business management strategies.
A Good Vision
Dear Mr. Olaposi,
I appreciatge your work. I am a participant in the 2007 edition of the BiD. I wish we can collaborate. My interest is in development of Small Business Incubation Facilities in Ogun State. With your activities in the area of Microfinance, we can join hand with you through our programme titled: Small Business Skills Training for Microfinance Institutions' Fund Seekers.
I will be glad to read from you. My email address is: isbume@yahoo.com
Kind regards and remain blessed.
Segun Benson